The GBP/USD pair fell drastically during the session on Wednesday, as the Bank of England suggested that further easing could be coming down the road. The United Kingdom has a very soft economy right now, and there are several people out there concerned about a "triple dip recession." With that being said, the central bank suggesting that further action may be needed of course isn't a good sign for Britain itself.
The candle looks absolutely horrible, and managed to smash through the 1.53 level with barely a struggle. Remember, the 1.53 level was the face of the ascending triangle that sent this market to the 1.63 handle over the course of last summer. In other words, there should've been a ton of support in this general vicinity. I had suggested previously that we could be going to the 1.50 level before it's all said and done, but to be honest with you I was really surprised that we did not get a bounce from the 1.53 handle.
Absolutely terrible
This chart looks absolutely terrible, and there's no other way to describe it. After this big of a crack through the floor, the market still is managing to close towards the very bottom of the candle. In other words, there's been almost no bounce or attempt to at least catch a falling knife, which of course is very rare, and shows an extreme weakness in this marketplace. Because of this, I have almost no doubt that there is more to come.
I believe that the 1.50 level will be tested in relatively short order, and as a result you may or may not even get a chance to sell some type of rally. After all, traders prefer to sell bounces after moves like this as the market will pick up even more momentum to the downside after doing something like that. However, sometimes you get a move like this that is simply one way. A one-way trade and market like this has to be trusted, and as a result I am willing to start selling right now, and understand that it will take a move above the 1.55 level for me to be convinced that my sell position is wrong.